Do you know the production cost calculation formula for scrap copper rods?

A customer asked me to talk about scrap copper before. Today I will tell you about the production cost calculation formula for scrap copper rods.

Because there are many factors to consider for scrap copper, and it is very complicated, I will just briefly talk about it here. If there are omissions or errors, please correct me! Here I summarize a formula that I think is more appropriate:

Recycled copper rod cost = raw material cost + processing cost + tax cost + other costs

This cost calculation formula is divided into four elements, and I will give you a detailed explanation of each part:

The raw material cost.

The raw material cost is the purchase cost of scrap copper. Generally includes cables, bright copper, copper rice, etc. We all know that the price of scrap copper is usually lower than that of refined copper, but the price difference between refined and scrap copper will change.

Just like recently, the price difference between refined and scrap copper has fallen sharply, indicating that the price of scrap copper is high, which has pushed up our raw material purchase cost.

There are many factors that affect the price of scrap copper, such as international import volume, international copper price fluctuations, market supply and demand, and national policies, including taxation, environmental protection policies, etc.

The processing cost.

Converting waste copper into copper rods requires a series of processes such as melting, refining, continuous casting and rolling, and these steps will generate corresponding processing costs. It also includes energy consumption costs, equipment depreciation costs, labor costs, etc.

As we all know, melting waste copper requires a lot of heat energy! The refining and continuous casting and rolling processes also consume a certain amount of electricity. I think equipment depreciation is an important part that cannot be ignored.

With continuous production, the equipment will definitely wear out and age gradually, and need to be repaired and updated. It is possible that the depreciation cost of this equipment is still relatively high. Finally, labor costs must also be included, and the wages and benefits paid are all costs. The proficiency of workers is also very important, as well as technical personnel. To ensure good production quality and efficiency, you must find professional, excellent, and suitable talents…

This total cost is definitely different for each company, because the factory scale is different, the technical level, and the production efficiency are different. In addition, during the smelting and processing process, some copper may be lost due to oxidation, volatilization, or remaining in the waste, and this loss rate should also be paid attention to.

Tax costs.

Tax policies have a great impact on the cost of recycled copper rods! This year, the State Council’s Order No. 783 imposed strict restrictions on the fiscal return policy of local governments, which led to an increase in the operating costs of recycled copper processing enterprises… In the past, the fiscal return policy of local governments may reduce some tax burdens for everyone, but now due to the restrictions of this policy, enterprises have no such preferential treatment, which has increased operating costs.

There is also the reverse invoicing policy, which may also increase the tax burden of enterprises. Because reverse invoicing may change the tax declaration and payment methods of enterprises, thereby increasing the difficulty and cost of tax management of enterprises.

Other expenses.

Including transportation costs, warehousing costs, environmental protection costs, policy changes, etc., all of which may have an impact on the cost of scrap copper rods… So I said that the cost of scrap copper rods is affected by many factors, and these factors change frequently! So everyone needs to pay attention to market dynamics and policy changes in real time, so that they can grasp the cost situation more accurately. Recently, the profit of recycled copper rod processing has dropped sharply, and even lost money, and many have stopped working. This is caused by the high price of scrap copper and the sluggish sales of copper rods. The high price of scrap copper will definitely directly increase the cost of raw materials, and the sluggish sales price of copper rods will definitely compress the profit margins of enterprises. Policy changes like this year, Order No. 783 and the implementation of the reverse invoicing policy have had a profound impact on the costs and profits of the entire recycling industry. Therefore, although this calculation is complicated, we must also consider it fully when calculating costs so that we can make a more accurate cost budget and make it easier for us to make decisions on corporate development.